and his two companies, Seismic Entertainment Productions and SmartBot.Net, have agreed to stop distributing programs that secretly crawl onto Web surfers' computers, though they will be able to display pop-up ads, according to an agreement filed on Dec. 20.
The agreement, filed in U.S. District Court in Concord, N.H., remains in place until the FTC's charges of deceptive business practices are settled.
The FTC sued Wallace in October in a case widely touted as the first federal attempt to crack down on spyware. The FTC said Wallace's software disables computers in an attempt to bully their owners into buying anti-spyware products.
Wallace did not have to admit guilt as part of the agreement. An attorney for Wallace was not available for comment, and an FTC spokesman declined to comment, citing the ongoing litigation.
Internet users running Microsoft's Internet Explorer Web browser become infected when they visit Web sites that contain certain banner ads, the FTC said.
The software then hijacks Web browsers, causes CD-ROM trays to slide open, and slows down computers or causes them to cease working altogether, all the while displaying a torrent of pop-up ads urging consumers to buy programs called Spy Wiper or Spy Deleter to clean up the mess.